TRICO BANCSHARES / 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The following discussion and analysis is designed to provide a better understanding of the significant changes and trends related to the Company and the Bank’s financial condition, operating results, asset and liability management, liquidity and capital resources and should be read in conjunction with the consolidated financial statements of the Company and the related notes at Part II, Item 8 of this report. In March 2022, the Company closed the acquisition of Valley Republic Bancorp. Historical periods prior to March 25, 2022 reflect results of legacy Trico Bancshares operations. Subsequent to closing, results reflect all post-acquisition activity. For further information, refer to Note 2 “Business Combinations” of the Notes to Consolidated Financial Statements. Financial Overview In 2024, the Company reported net income of $114.9 million, an $2.5 million or 2.1% decrease from the prior year. Earnings per share on a diluted basis for the year were $3.46, down 1.7% from the prior year. The current year net income reported was impacted by declines in net interest income primarily associated with elevated interest expense and partially offset by a reduction in provision for loan losses. In 2024, total interest expense was reported at $135.2 million, an increase of $53.5 million or 65.5% from the prior year. Net interest income on a fully tax equivalent (FTE) basis, a non-GAAP financial measure, was $332.5 million, a decrease of $25.7 million, or 7.2%, from 2023. The decrease in FTE net interest income reflects the $64.9 million, or 0.7%, decrease in average earning assets and a 25 basis point decrease in the FTE net interest margin to 3.71%. Average earning asset declines included a $308.7 million or 12.6% decrease in average securities, partially offset by an $189.8 million, or 2.9% increase in average loans and leases. The decrease in average securities was driven by the redeployment of liquidity from prepayments and maturities into the pay down of borrowings and loan growth during 2024. The net interest margin contraction was driven by the higher rate environment and a liability sensitive balance sheet, resulting in an increase in the higher cost of funds from both deposits and borrowings. This increase in interest expense was partially offset by improved yields on loan balances and to a greater extent, by the continued balance sheet mix shift where liquidity from deposit growth and investment security principal repayments were utilized to pay down borrowings. Total average interest-bearing deposits was $5.4 billion and $5.0 billion during 2024 and 2023, respectively, while average other borrowings totaled $294.3 million and $430.7 million, respectively, during the same periods. The provision for credit losses decreased $17.4 million to $6.6 million, primarily due to muted loan volume during 2024 and generally stable qualitative reserve levels, relative to the 2023 volatility driven by CA unemployment trends and rising Corporate BBB bond yields. The allowance for credit losses (ACL) was $125.4 million, or 1.85% of total loans and leases, at December 31, 2024, compared to $121.5 million, or 1.79% of total loans and leases, at December 31, 2023. Noninterest income was $64.4 million, up $3.0 million, or 4.9%, from the prior year. While noninterest expense of $234.1 million remained generally consistent (up $0.9 million or 0.4%, from the prior year), a variety of both increases and decreases in individual expense items offset one another. The year over year changes in noninterest income reflected improved earnings on deposit accounts and other fees, coupled with elevated earnings from asset management from continued growth in assets under management. The tangible common equity to tangible assets ratio, a non-GAAP financial measure, was 9.72% at December 31, 2024, up 92 basis points from December 31, 2023, primarily due to an increase in tangible common equity related primarily to the retention of 2024 earnings. 30 TriCo Bancshares 2024 10-K T a ble of Contents TRICO BANCSHARES Financial Summary (In thousands, except per share amounts; unaudited) Year ended December 31, 2024 2023 2022 Interest income $ 466,638 $ 438,354 $ 355,505 Interest expense (135,204) (81,677) (9,529) Net interest income 331,434 356,677 345,976 (Provision for) benefit from loan losses (6,632) (23,990) (18,470) Noninterest income 64,407 61,400 63,046 Noninterest expense (234,105) (233,182) (216,645) Income before income taxes 155,104 160,905 173,907 Provision for income taxes (40,236) (43,515) (48,488) Net income $ 114,868 $ 117,390 $ 125,419 Share Data Earnings per share: Basic $ 3.47 $ 3.53 $ 3.85 Diluted $ 3.46 $ 3.52 $ 3.83 Per share: Dividends paid $ 1.32 $ 1.20 $ 1.10 Book value at period end $ 37.03 $ 34.86 $ 31.39 Tangible book value at period end (2) $ 27.60 $ 25.39 $ 21.76 Average common shares outstanding 33,088 33,261 32,584 Average diluted common shares outstanding 33,230 33,355 32,721 Shares outstanding at period end 32,970 33,268 33,332 Financial Ratios During the period: Return on average assets 1.18 % 1.19 % 1.28 % Return on average equity 9.57 % 10.65 % 11.67 % Net interest margin(1) 3.71 % 3.96 % 3.88 % Efficiency ratio 59.14 % 55.77 % 52.97 % Average equity to average assets 12.30 % 11.17 % 11.00 % Dividend payout ratio 38.00 % 33.99 % 28.54 % At period end: Equity to assets 12.62 % 11.70 % 10.54 % Total capital to risk-weighted assets 15.71 % 14.73 % 14.19 % Balance Sheet Data Total investments $ 2,036,610 $ 2,305,882 $ 2,633,269 Total loans 6,768,523 6,794,470 6,450,447 Total assets 9,673,728 9,910,089 9,930,986 Total non-interest bearing deposits 2,548,613 2,722,689 3,502,095 Total deposits 8,087,576 7,834,038 8,329,013 Total other borrowings 89,610 632,582 264,605 Total junior subordinated debt 101,191 101,099 101,040 Total shareholders’ equity 1,220,907 1,159,682 1,046,416 Total tangible equity (2) $ 910,033 $ 844,688 $ 725,304 (1) Fully taxable equivalent (FTE) (2) Tangible equity is calculated by subtracting Goodwill and Other intangible assets from total shareholders’ equity. Management believes that tangible equity is meaningful because it is a measure that the Company and investors commonly use to assess capital adequacy. Tangible book value is calculated by dividing tangible equity by shares outstanding at period end. See tables below for further details. As TriCo Bancshares has not commenced any business operations independent of the Bank, the following discussion pertains primarily to the Bank. Average balances, including such balances used in calculating certain financial ratios, are generally comprised of average daily balances for the Company. Within Management’s Discussion and Analysis of Financial Condition and Results of Operations, interest income and net interest income may be presented on a fully tax-equivalent (FTE) basis. The presentation of interest income and net interest income on a FTE basis is a common practice within the banking industry. Interest income and net interest income are shown on a non-FTE basis within Part II, Item 7 and Item 8 of this report, and a reconciliation of the FTE and non-FTE presentations is provided below in the discussion of net interest income. In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this 10-K contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures because it believes that they provide useful and comparative information to assess trends in the Company's core operations reflected in the periods presented 31 TriCo Bancshares 2024 10-K T a ble of Contents and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below: Twelve months ended (dollars in thousands) December 31, 2024 December 31, 2023 Net interest margin Acquired loans discount accretion, net: Amount (included in interest income) $4,329 $5,651 Effect on average loan yield 0.07 % 0.09 % Effect on net interest margin (FTE) 0.05 % 0.06 % Net interest margin (FTE) 3.71 % 3.96 % Net interest margin less effect of acquired loan discount accretion (Non-GAAP) 3.66 % 3.90 % Twelve months ended (dollars in thousands) December 31, 2024 December 31, 2023 Pre-tax pre-provision return on average assets or equity Net income (GAAP) $114,868 $117,390 Exclude provision for income taxes 40,236 43,515 Exclude provision for credit losses 6,632 23,990 Net income before income tax and provision expense (Non-GAAP) $161,736 $184,895 Average assets (GAAP) $9,757,326 $9,870,189 Average equity (GAAP) $1,200,140 $1,102,436 Return on average assets (GAAP) 1.18 % 1.19 % Pre-tax pre-provision return on average assets (Non-GAAP) 1.66 % 1.87 % Return on average equity (GAAP) 9.57 % 10.65 % Pre-tax pre-provision return on average equity (Non-GAAP) 13.48 % 16.77 % Twelve months ended (dollars in thousands) December 31, 2024 December 31, 2023 Return on tangible common equity Average total shareholders' equity $1,200,140 $1,102,436 Exclude average goodwill 304,442 304,442 Exclude average other intangibles 8,592 13,611 Average tangible common equity (Non-GAAP) $887,106 $784,383 Net income (GAAP) $114,868 $117,390 Exclude amortization of intangible assets, net of tax effect 2,900 4,309 Tangible net income available to common shareholders (Non-GAAP) $117,768 $121,699 Return on average equity 9.57 % 10.65 % Return on average tangible common equity (Non-GAAP) 13.28 % 15.52 % 32 TriCo Bancshares 2024 10-K T a ble of Contents Three months ended (dollars in thousands) December 31, 2024 December 31, 2023 Tangible shareholders' equity to tangible assets Shareholders' equity (GAAP) $1,220,907 $1,159,682 Exclude goodwill and other intangible assets, net 310,874 314,994 Tangible shareholders' equity (Non-GAAP) $910,033 $844,688 Total assets (GAAP) $9,673,728 $9,910,089 Exclude goodwill and other intangible assets, net 310,874 314,994 Total tangible assets (Non-GAAP) $9,362,854 $9,595,095 Shareholders' equity to total assets (GAAP) 12.62 % 11.70 % Tangible shareholders' equity to tangible assets (Non-GAAP) 9.72 % 8.80 % Three months ended (dollars in thousands) December 31, 2024 December 31, 2023 Tangible common shareholders' equity per share Tangible shareholders' equity (Non-GAAP) $910,033 $844,688 Common shares outstanding at end of period 32,970,425 33,268,102 Common shareholders' equity (book value) per share (GAAP) $37.03 $34.86 Tangible common shareholders' equity (tangible book value) per share (Non-GAAP) $27.60 $25.39 Critical Accounting Policies and Estimates In preparing the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Our most significant accounting policies and estimates and their related application are discussed below. Allowance for Credit Losses The Company’s method for assessing the appropriateness of the allowance for credit losses includes specific allowances for individually analyzed loans, formula allowance factors for pools of credits, and qualitative considerations which include, among other things, current and forecasted economic and environmental factors (e.g., interest rates, growth, economic conditions, etc.). Allowance factors for loan pools were based on historical loss experience by product type and prior risk rating. Management estimates the ACL balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. Historical credit loss experience provides the basis for the estimation of expected credit losses, which captures loan balances as of a point in time to form a cohort, then tracks the respective losses generated by that cohort of loans over the remaining life. The Company has identified and accumulated loan cohort historical loss data beginning with the fourth quarter of 2008 and through the current period. In situations where the Company's actual loss history was not statistically relevant, the loss history of peers, defined as financial institutions with assets greater than three billion and less than ten billion, were utilized to create a minimum loss rate. Adjustments to historical loss information are made for differences in relevant current loan-specific risk characteristics, such as historical timing of losses relative to the loan origination. In its current expected credit loss forecasting framework, the Company incorporates forward-looking information through the use of macroeconomic scenarios applied over the forecasted life of the assets. These macroeconomic scenarios incorporate variables that have historically been key drivers of increases and decreases in credit losses. These variables include, but are not limited to, changes in environmental conditions, such as California unemployment rates, household debt levels, and the pace of change in corporate bond yields. The Company also considers macroeconomic forecasts to estimate the ACL. There is a greater chance that the Company would suffer a loss from a loan that was risk rated less than satisfactory than if the loan was last graded satisfactory. As such, the proper risk grading of loans in the portfolio is important to the determination of the calculation of and determination of adequacy of the allowance for credit losses. Utilizing the historical loss data described above, the Company applies 33 TriCo Bancshares 2024 10-K T a ble of Contents reserve rates within any unique pool based on its loss and risk grade migration. Therefore, within any given pool, a larger loss estimation factor is applied to less than satisfactory loans as compared to those that the Company last graded as satisfactory. The resulting allowance for any pool is the sum of the calculated reserves determined in this manner. Certain loans are not included in pools of loans that are collectively evaluated. The segregation of these loans is based on the results from analysis of individually identified credits that meet management’s criteria for individual evaluation. These loans are first reviewed individually to determine if such loans have a unique risk profile that would warrant individual evaluation. Loans where management has concluded that it is probable that the borrower will be unable to pay all amounts due under the original contractual terms are removed from the pools of loans collectively evaluated. They are then specifically reviewed and evaluated individually by management for loss potential by evaluating sources of repayment, including collateral as applicable, and a specified allowance for credit losses is established where necessary. By definition, any loan that management has placed on non-accrual is required to be individually evaluated, however, not all individually evaluated loans need to be placed on non-accrual. Because current economic conditions and forecasts can change and future events make it inherently difficult to predict the anticipated amount of estimated credit losses on loans, management's determination of the appropriateness of the ACL, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may move independently of one another, such that improvement in one or certain factors may offset deterioration in others. Thus, as a result of the significant size of the loan portfolio, the numerous assumptions in the model, and the high degree of potential change in such assumptions, there is a high degree of sensitivity to the reported amounts. Management believes that the ACL was adequate as of December 31, 2024. Other Accounting Policies and Estimates that are Not Considered Critical On an on-going basis, the Company evaluates its estimates, including those that may materially affect the financial statements and are related to investments, mortgage servicing rights, fair value measurements, retirement plans, intangible assets and the fair value of acquired assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company’s policies related to these estimates can be found in Note 1 in the financial statements at Part II, Item 8 of this report. Geographical Descriptions For the purpose of describing the geographical location of the Company’s operations, the Company has defined northern California as that area of California north of, and including, Stockton to the east and San Jose to the west; central California as that area of the state south of Stockton and San Jose, to and including, Bakersfield to the east and San Luis Obispo to the west; and southern California as that area of the state south of Bakersfield and San Luis Obispo. Results of Operations Average balances, including balances used in calculating certain financial ratios, are generally comprised of average daily balances for the Company. Within Management’s Discussion and Analysis of Financial Condition and Results of Operations, certain performance measures including interest income, net interest income, net interest yield, and efficiency ratio are generally presented on a fully tax-equivalent (FTE) basis. The Company believes the use of these non-generally accepted accounting principles (non-GAAP) measures provides additional clarity in assessing its results. Net Interest Income Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on our average interest-earning assets and the effective cost of our interest-bearing liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. For further discussion, refer to “—Risk Factors – Risks Related to Interest Rates.” Following is a summary of the Company’s net interest income for the periods indicated (dollars in thousands): 34 TriCo Bancshares 2024 10-K T a ble of Contents Year ended December 31, 2024 2023 2022 Interest income $ 466,638 $ 438,354 $ 355,505 Interest expense (135,204) (81,677) (9,529) Net interest income (not FTE) 331,434 356,677 345,976 FTE adjustment 1,085 1,536 1,560 Net interest income (FTE) $ 332,519 $ 358,213 $ 347,536 Net interest margin (FTE) 3.71 % 3.96 % 3.88 % Acquired loans discount accretion: Purchased loan discount accretion $ 4,329 $ 5,651 $ 5,465 Effect on average loan yield 0.07 % 0.09 % 0.09 % Effect of purchased loan discount accretion on net interest margin (FTE) 0.05 % 0.06 % 0.07 % Net interest income (FTE) during the year ended December 31, 2024 decreased $25.7 million or 7.2% to $332.5 million compared against $358.2 million during the year ended December 31, 2023. The decreased amount of net interest income reflects the higher rate environment driving an increase in the cost of funds from both deposits and borrowings, partially offset by improved yields on loan and lease balances, and investment securities during 2024. Average loan balances increased by $189.8 million or 2.9% from December 31, 2023. Meanwhile, the yield on interest earning assets was 5.21% and 4.87% for the years ended December 31, 2024 and 2023, respectively. This 34 basis point increase in total earning asset yield was attributable to a 35 basis point increase in total loan yields and a 7 basis point increase in yields on total investments. Of the 35 basis point increase in loan yields, 11 basis points was attributable to increased volume in average loans outstanding, and 26 basis points from elevated interest rates. There was a decline of 2 basis points attributed to the accretion of purchased loan fees. Meanwhile, the costs of total interest bearing liabilities increased 85 basis points to 2.33% during the year ended December 31, 2024, as compared to 1.48% for the year ended December 31, 2023. During the same period, costs associated with interest bearing deposits increased by 99 basis points to 2.09% as compared to 1.10% in the prior year. The increase in interest expense for the year ended December 31, 2024, as compared to the trailing year, was due to the increase in short term interest rates, as influenced by the FOMC actions, that began in 2023 and which remained elevated until late 2024. Net interest income (FTE) during the year ended December 31, 2023 increased $10.7 million or 3.1% to $358.2 million compared against $347.5 million during the year ended December 31, 2022. The increased amount of net interest income reflects growth in both total average loan and investment balances outstanding and the correlated yields, during 2023. Average loan balances increased by $690.9 million or 11.8% from December 31, 2022. The yield on interest earning assets was 4.87% and 3.98% for the years ended December 31, 2023 and 2022, respectively. This 89 basis point increase in total earning asset yield was primarily attributable to a 58 basis point increase in total loan yields and a 80 basis point increase in yields on total investments. Of the 58 basis point increase in yields on loans, a 3 basis point decline was attributable to decreases in market rates, as well as an 8 basis point benefit from the accretion of purchased loans. The costs of total interest bearing liabilities increased 129 basis points to 1.48% during the year ended December 31, 2023, as compared to 0.19% for the year ended December 31, 2022. During the same period, costs associated with interest bearing deposits increased by 100 basis points to 1.10% as compared to 0.10% in the prior year. The increase in interest expense for the year ended December 31, 2023, as compared to the trailing year, was due largely to the increased rate environment for both the interest-bearing deposit expense and other borrowings interest expense. For more information related to loan interest income, including loan purchase discount accretion, see the Summary of Average Balances, Yields/Rates and Interest Differential . The “Yield” and “Volume/Rate” tables shown below are useful in illustrating and quantifying the developments that affected net interest income during 2024 and 2023. Summary of Average Balances, Yields/Rates and Interest Differential – Yield Tables The following tables present, for the periods indicated, information regarding the Company’s consolidated average assets, liabilities and shareholders’ equity, the amounts of interest income from average earning assets and resulting yields, and the amount of interest expense paid on interest-bearing liabilities. Average loan balances include nonperforming loans. Interest income includes proceeds from loans on nonaccrual loans only to the extent cash payments have been received and applied to interest income. Yields on securities and certain loans have been adjusted upward to reflect the effect of income thereon exempt from federal income taxation at the statutory tax rate applicable during the period presented (dollars in thousands): 35 TriCo Bancshares 2024 10-K T a ble of Contents Year ended December 31, 2024 2023 2022 Average Balance Interest Income/ Expense Rates Earned /Paid Average Balance Interest Income/ Expense Rates Earned /Paid Average Balance Interest Income/ Expense Rates Earned /Paid Assets: Loans $ 6,747,072 $ 390,491 5.79 % $ 6,557,246 $ 356,710 5.44 % $ 5,866,360 $ 285,375 4.86 % Investment securities—taxable 2,008,823 68,434 3.41 % 2,272,301 75,203 3.31 % 2,459,032 60,499 2.46 % Investment securities—nontaxable (1) 136,530 4,700 3.44 % 181,766 6,656 3.66 % 190,339 6,759 3.55 % Total investments 2,145,353 73,134 3.41 % 2,454,067 81,859 3.34 % 2,649,371 67,258 2.54 % Cash at Federal Reserve and other banks 80,439 4,098 5.09 % 26,469 1,321 4.99 % 452,300 4,432 0.98 % Total interest-earning assets 8,972,864 467,723 5.21 % 9,037,782 439,890 4.87 % 8,968,031 357,065 3.98 % Other assets 784,462 832,407 803,570 Total assets $ 9,757,326 $ 9,870,189 $ 9,771,601 Liabilities and shareholders’ equity: Interest-bearing demand deposits $ 1,734,900 $ 22,998 1.33 % $ 1,709,930 $ 11,190 0.65 % $ 1,720,932 $ 452 0.03 % Savings deposits 2,677,726 49,028 1.83 % 2,805,424 31,444 1.12 % 2,878,189 3,356 0.12 % Time deposits 999,143 41,100 4.11 % 473,688 12,453 2.63 % 302,619 881 0.29 % Total interest-bearing deposits 5,411,769 113,126 2.09 % 4,989,042 55,087 1.10 % 4,901,740 4,689 0.10 % Other borrowings 294,318 14,706 5.00 % 430,736 19,712 4.58 % 33,410 421 1.26 % Junior subordinated debt 101,139 7,372 7.29 % 101,064 6,878 6.81 % 91,138 4,419 4.85 % Total interest-bearing liabilities 5,807,226 135,204 2.33 % 5,520,842 81,677 1.48 % 5,026,288 9,529 0.19 % Noninterest-bearing deposits 2,584,904 3,068,839 3,492,713 Other liabilities 165,056 178,072 178,163 Shareholders’ equity 1,200,140 1,102,436 1,074,437 Total liabilities and shareholders’ equity $ 9,757,326 $ 9,870,189 $ 9,771,601 Net interest spread (2) 2.88 % 3.39 % 3.79 % Net interest income and interest margin (3) $ 332,519 3.71 % $ 358,213 3.96 % $ 347,536 3.88 % (1) The fully-taxable equivalent (FTE) adjustment for interest income of non-taxable investment securities was $1.1 million, $1.5 million, and $1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. (2) Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. (3) Net interest margin is computed by dividing net interest income by total average earning assets. 36 TriCo Bancshares 2024 10-K T a ble of Contents Summary of Changes in Interest Income and Expense due to Changes in Average Asset and Liability Balances and Yields Earned and Rates Paid – Volume/Rate Tables The following table sets forth a summary of the changes in the Company’s interest income and interest expense from changes in average asset and liability balances (volume) and changes in average interest rates for the periods indicated. Changes applicable to both rate and volume have been included in the rate variance. Amounts are calculated on a fully taxable equivalent basis: 2024 over 2023 2023 over 2022 Volume Rate Total Volume Rate Total Increase (decrease) in interest income: Loans $ 10,327 $ 23,454 $ 33,781 $ 33,577 $ 37,758 $ 71,335 Investment securities (10,376) 1,651 (8,725) (4,961) 19,562 14,601 Cash at Federal Reserve and other banks 2,694 83 2,777 (4,173) 1,062 (3,111) Total interest-earning assets 2,645 25,188 27,833 24,443 58,382 82,825 Increase (decrease) in interest expense: Interest-bearing demand deposits 163 11,645 11,808 (3) 10,741 10,738 Savings deposits (1,431) 19,015 17,584 (87) 28,175 28,088 Time deposits 13,814 14,833 28,647 496 11,076 11,572 Other borrowings (6,243) 1,237 (5,006) 5,006 14,285 19,291 Junior subordinated debt 5 489 494 481 1,978 2,459 Total interest-bearing liabilities 6,308 47,219 53,527 5,893 66,255 72,148 Increase (decrease) in net interest income $ (3,663) $ (22,031) $ (25,694) $ 18,550 $ (7,873) $ 10,677 Year Over Year Balance Sheet Change Ending balances As of December 31, % Change ($’s in thousands) 2024 2023 $ Change Total assets $ 9,673,728 $ 9,910,089 $ (236,361) (2.4) % Total loans 6,768,523 6,794,470 (25,947) (0.4) % Total investments 2,036,610 2,305,882 (269,272) (11.7) % Total deposits 8,087,576 7,834,038 253,538 3.2 % Total other borrowings 89,610 632,582 (542,972) (85.8) % Balance sheet mix shift where liquidity from deposit growth and investment security principal repayments were utilized to pay down borrowings assisted in minimizing the compression in net interest income and net interest margin during the year ended 2024. More specifically, deposit increases of $253.5 million and principal repayments on investment securities of $269.3 million, facilitated a $543.0 million reduction in higher cost balances of other borrowings. Provision for Credit Losses The provision for credit losses during any period is the sum of the allowance for credit losses required at the end of the period and any net charge-offs during the period, less the allowance for credit losses required at the beginning of the period, and less any recoveries during the period. See the Tables labeled “Allowance for Credit Losses – December 31, 2024 and 2023” at Note 5 in Item 8 of Part II of this report for the components that make up the provision for credit losses for the years ended December 31, 2024 and 2023. The Company recorded a provision for credit losses of $6.6 million during the year ended December 31, 2024, versus $24.0 million during the trailing year end. The decrease in required provisioning during 2024 was largely attributed to muted loan growth and less change in qualitative reserves driven by more stability in CA unemployment trends and Corporate BBB bond yields, as compared to the trailing year. The Company recorded a provision for credit losses of $24.0 million during the year ended December 31, 2023, versus $18.5 million during the trailing year end. The increase in required provisioning during 2023 was largely attributed to elevated qualitative reserves driven by CA unemployment trends and rising Corporate BBB bond yields, and to a lesser extent, organic loan and lease growth. Net charge-offs for the year ended December 31, 2024 totaled $2.6 million , as compared to net recoveries of $6.6 million for the year ended December 31, 2023. Total nonperforming loans increased by 19 basis points to 0.65% of total loans at December 31, 2024 from 0.46% of total loans at December 31, 2023. For further details of the chan1ge in nonperforming loans during the period ended December 31, 2024 see the Tables, and associated narratives, labeled “Changes in nonperforming assets during the year ended December 31, 2024” and “Changes in nonperforming assets during the three months ended December 31, 2024” under the heading “Asset Quality and Non-Performing Assets ” below. 37 TriCo Bancshares 2024 10-K T a ble of Contents The following table summarizes the components of the provision for credit losses during the periods indicated (dollars in thousands): Year ended December 31, (dollars in thousands) 2024 2023 2022 Provision for allowance for credit losses $ 6,482 $ 22,455 $ 17,945 Change in reserve for unfunded loan commitments 150 1,535 525 Total provision for credit losses $ 6,632 $ 23,990 $ 18,470 The provision for credit losses is based on management’s evaluation of inherent risks in the loan portfolio and a corresponding analysis of the allowance for credit losses. Additional discussion on loan quality, our procedures to measure loan impairment, and the allowance for credit losses is provided under the heading “Asset Quality and Non-Performing Assets ” below. Non-interest Income The following table summarizes the Company’s non-interest income for the periods indicated (dollars in thousands): Year Ended December 31, 2024 2023 2022 ATM and interchange fees $ 25,319 $ 26,459 $ 26,767 Service charges on deposit accounts 19,451 17,595 16,536 Other service fees 5,301 4,732 4,274 Mortgage banking service fees 1,739 1,808 1,887 Change in value of mortgage loan servicing rights (480) (506) 301 Total service charges and fees 51,330 50,088 49,765 Increase in cash value of life insurance 3,257 3,150 2,858 Asset management and commission income 5,573 4,517 3,986 Gain on sale of loans 1,532 1,166 2,342 Lease brokerage income 455 441 820 Sale of customer checks 1,216 1,383 1,167 (Loss) gain on sale/exchange of investment securities (43) (284) — (Loss) gain on marketable equity securities 126 36 (340) Other 961 903 2,448 Total other non-interest income 13,077 11,312 13,281 Total non-interest income $ 64,407 $ 61,400 $ 63,046 Non-interest income increased $3.0 million or 4.90% to $64.4 million during the year ended December 31, 2024, as compared to $61.4 million during the year ended December 31, 2023. ATM and interchange fees declined in the 2024 period by $1.1 million as compared to the twelve months ended December 31, 2023. Meanwhile, service charges on deposit accounts and other service fees increased by $1.9 million and $0.6 million, respectively, as compared to the equivalent period in 2023 following $0.9 million in waived or reversed fees as a courtesy to customers in the prior year. Elevated levels of assets under management and transaction activity within asset management operations further contributed to the overall improvement in income during the year ended 2024. During 2023, total service charges and fees increased $0.3 million which is net of approximately $0.9 million in waived or reversed fees related to the network outage that occurred in the first quarter of the year. Mortgage origination related activity declined year over year due to elevated interest rates, as the income recorded from the sale of loans was down $1.2 million or 50.2%. Changes in interest rates also led to a decline in fair value of mortgage servicing rights during the twelve months ended December 31, 2023, which decreased by $0.8 million or 268.1%, as compared to the trailing twelve month period ended. Other income declined $1.5 million or 63.1%, $0.6 million of which is attributed to fees from the sale of deposits during 2022. 38 TriCo Bancshares 2024 10-K T a ble of Contents Non-interest Expense The following table summarizes the Company’s other non-interest expense for the periods indicated (dollars in thousands): Year Ended December 31, 2024 2023 2022 Base salaries, net of deferred loan origination costs $ 96,862 $ 94,564 $ 84,861 Incentive compensation 16,897 15,557 17,908 Benefits and other compensation costs 26,822 25,674 27,083 Total salaries and benefits expense 140,581 135,795 129,852 Occupancy 16,411 16,135 15,493 Data processing and software 20,952 18,933 14,660 Equipment 5,424 5,644 5,733 Intangible amortization 4,120 6,118 6,334 Advertising 3,851 3,531 3,694 ATM and POS network charges 7,151 7,080 6,984 Professional fees 6,794 7,358 4,392 Telecommunications 2,053 2,547 2,298 Regulatory assessments and insurance 4,951 5,276 3,142 Merger and acquisition expenses — — 6,253 Postage 1,329 1,236 1,147 Operational losses 1,681 2,444 1,000 Courier service 2,119 1,851 2,013 (Gain) loss on sale or acquisition of foreclosed assets (73) (133) (481) (Gain) loss on disposal of fixed assets 19 23 (1,070) Other miscellaneous expense 16,742 19,344 15,201 Total other non-interest expense 93,524 97,387 86,793 Total non-interest expense $ 234,105 $ 233,182 $ 216,645 Average full-time equivalent staff 1,170 1,214 1,169 Total non-interest expense increased $0.9 million or 0.40% to $234.1 million during the year ended December 31, 2024, as compared to $233.2 million for the comparative period in 2023, This was largely attributed to an increase of $4.8 million or 3.5% in total salaries and benefits expense to $140.6 million, from routine compensation adjustments and other increases in benefits and compensation. As noted above, salaries expense was also impacted by an increase in average compensation per employee as various strategic talent acquisitions were made in order to further prepare the Company to execute its growth objectives beyond $10 billion in total assets. Additionally, data processing and software expenses increased by $2.0 million or 10.7% related to ongoing investments in the Company's data management and security infrastructure. These increases were partially offset by declines in non-cash intangible amortization expense of $2.0 million or 32.7% and reductions in operational losses of $0.8 million or 31.2% due to ATM burglary expenses totaling $0.7 million in the comparative period. Non-interest expense increased by $16.5 million or 7.63% to $233.2 million during the year ended December 31, 2023 as compared to $216.6 million for the trailing twelve month period for reasons primarily associated with the acquisition of Valley Republic Bank in March of 2022 which resulted in expense increases for nearly every identified category. Merger and acquisition expenses associated with this acquisition totaled $6.2 million for the twelve-month period ended 2022. Regulatory assessment charges also increased by approximately $1.2 million during 2023 as a result of increases in assessment rates. Other miscellaneous expenses also increased by $4.1 million in 2023 due to, among other things, changes in regulatory requirements which resulted in an estimated $0.8 million in refunds to customers previously charged non-sufficient funds fees, changes in the valuation of other real estate owned which contributed to $0.9 million in variance from the prior year, and other increases generally associated with increased operational costs. 39 TriCo Bancshares 2024 10-K T a ble of Contents The provisions for income taxes applicable to income before taxes for the years ended December 31, 2024, 2023, and 2022 differ from amounts computed by applying the statutory Federal income tax rates to income before taxes. The effective tax rate and the statutory federal income tax rate are reconciled as follows: Year Ended December 31, 2024 2023 2022 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 7.9 7.9 7.9 Tax-exempt interest on municipal obligations (0.5) (0.7) (0.7) Tax-exempt life insurance related income (0.4) (0.4) (0.4) Low income housing and other tax credits (7.9) (6.6) (3.7) Low income housing tax credit amortization 6.9 5.6 3.6 Compensation and benefits 0.1 0.3 (0.2) Non-deductible merger expenses — — 0.1 Other (1.2) (0.1) 0.3 Effective Tax Rate 25.9 % 27.0 % 27.9 % The effective tax rate on income was 25.9%, 27.0%, and 27.9% in 2024, 2023, and 2022, respectively. The effective tax rate was greater than the Federal statutory rates of 21% due to the combination of state tax expenses of 7.9%. The impact of Federal and state tax expenses were partially offset by Federal tax-exempt interest income of $5.6 million, $5.5 million, and $3.1 million, respectively, Federal and State tax-exempt income of $3.1 million, $3.2 million, and $3.5 million, respectively, from increase in cash value and gain on death benefit of life insurance, and low income housing tax credits and losses, net of amortization of $1.5 million, $0.2 million, and $0.6 million, respectively. The low-income housing tax credits and the equity compensation excess tax benefits represent direct reductions in tax expense. The items noted above resulted in an effective combined Federal and State income tax rate that differed from the combined Federal and State statutory income tax rate of approximately 29.6% during the three years ended 2024, 2023, and 2022. Financial Condition Restricted Equity Securities Restricted equity securities were $17.3 million at December 31, 2024 and 2023 . The entire balance of restricted equity securities at December 31, 2024 and 2023 represents the Bank’s investment in the Federal Home Loan Bank of San Francisco (“FHLB”). FHLB stock is carried at par and does not have a readily determinable fair value. While technically these are considered equity securities, there is no market for the FHLB stock. Therefore, the shares are considered as restricted investment securities. Management periodically evaluates FHLB stock for other-than-temporary impairment. Management’s determination of whether these investments are impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as (1) the significance of any decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and, accordingly, the customer base of the FHLB, and (4) the liquidity position of the FHLB. As a member of the FHLB system, the Bank is required to maintain a minimum level of investment in FHLB stock based on specific percentages of its outstanding mortgages, total assets, or FHLB advances. The Bank may request redemption at par value of any stock in excess of the minimum required investment. Stock redemptions are at the discretion of the FHLB. Loans The Bank concentrates its lending activities in four principal areas: real estate mortgage loans (residential and commercial loans), consumer loans, commercial loans (including agricultural loans), and real estate construction loans. The interest rates charged for the loans made by the Bank vary with the degree of risk, the size and maturity of the loans, the borrower’s relationship with the Bank and prevailing money market rates indicative of the Bank’s cost of funds. The majority of the Bank’s loans are direct loans made to individuals, farmers and local businesses. The Bank relies substantially on local promotional activity and personal contacts by bank officers, directors and employees to compete with other financial institutions. The Bank makes loans to borrowers whose applications include a sound purpose, a viable repayment source and a plan of repayment established at inception and generally backed by a secondary source of repayment. 40 TriCo Bancshares 2024 10-K T a ble of Contents Loan Portfolio Composition The following table shows the Company’s loan balances, including net deferred loan fees, at the dates indicated: Year ended December 31, (dollars in thousands) 2024 2023 2022 Commercial real estate 4,577,632 $ 4,394,802 $ 4,359,083 Consumer 1,281,059 1,313,268 1,240,743 Commercial and industrial 471,271 586,455 569,921 Construction 279,933 347,198 211,560 Agriculture production 151,822 144,497 61,414 Leases 6,806 8,250 7,726 Total loans $ 6,768,523 $ 6,794,470 $ 6,450,447 Allowance for credit losses $ (125,366) $ (121,522) $ (105,680) The Company did not purchase any loans during 2024 or 2023. During the year ended 2022, the Company acquired loans totaling $773.3 million in connection with the merger with VRB in March of 2022, inclusive of approximately $68.5 million in loans with credit deterioration. The following table shows the Company’s loan balances, including net deferred loan fees, as a percentage of total loans at the dates indicated: Year ended December 31, (dollars in thousands) 2024 2023 2022 Commercial real estate 67.6 % 64.7 % 67.6 % Consumer 18.9 % 19.3 % 19.2 % Commercial and industrial 7.1 % 8.7 % 8.8 % Construction 4.1 % 5.1 % 3.3 % Agriculture production 2.2 % 2.1 % 1.0 % Leases 0.1 % 0.1 % 0.1 % Total loans 100.0 % 100.0 % 100.0 % Allowance for credit losses 1.85 % 1.79 % 1.64 % At December 31, 2024, loans including net deferred loan fees, totaled $6.8 billion which was a 0.4% or $25.9 million decrease over the balance at the end of December 31, 2023. At December 31, 2023, loans including net deferred loan fees, totaled $6.8 billion, which was a 5.3% or $344.0 million increase over the balance at the end of December 31, 2022. From time to time the Bank may be presented with the opportunity to purchase individual or pools of loans in whole or in part outside of a transaction that would be considered a business combination. As of December 31, 2024 and 2023, the outstanding carrying value of purchased loans that were not acquired in a business combination totaled $155.6 million and $159.1 million, respectively. Asset Quality and Nonperforming Assets Nonperforming Assets The following tables set forth the amount of the Bank’s nonperforming assets as of the dates indicated. “Performing non-accrual loans” are loans that may be current for both principal and interest payments, or are less than 90 days past due, but for which payment in full of both principal and interest is not expected, and are not well secured and in the process of collection: 41 TriCo Bancshares 2024 10-K T a ble of Contents December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Performing nonaccrual loans $ 19,543 $ 25,380 $ 19,543 $ 27,713 $ 22,896 Nonperforming nonaccrual loans 24,493 6,500 1,770 2,637 3,968 Total nonaccrual loans 44,036 31,880 21,313 30,350 26,864 Loans 90 days past due and still accruing 60 10 8 — — Total nonperforming loans 44,096 31,890 21,321 30,350 26,864 Foreclosed assets 2,786 2,705 3,439 2,594 2,844 Total nonperforming assets $ 46,882 $ 34,595 $ 24,760 $ 32,944 $ 29,708 U.S. government, including its agencies and its government-sponsored agencies, guaranteed portion of nonperforming loans $ 819 $ 877 $ 225 $ 756 $ 811 Nonperforming assets to total assets 0.48 % 0.35 % 0.25 % 0.38 % 0.39 % Nonperforming loans to total loans 0.65 % 0.47 % 0.33 % 0.61 % 0.56 % Allowance for credit losses to nonperforming loans 284 % 381 % 516 % 281 % 342 % Changes in nonperforming assets during the year ended December 31, 2024 The following table shows the activity in the balance of nonperforming assets for the year ended December 31, 2024: (in thousands) Balance at December 31, 2023 Additions Advances/ Paydowns, net Charge-offs/ Write-downs Transfers to Foreclosed Assets Balance at December 31, 2024 Commercial real estate: CRE non-owner occupied $ 2,024 $ 4,211 $ (3,218) $ — $ — $ 3,017 CRE owner occupied 3,994 774 (894) — — 3,874 Multifamily — 502 (22) — — 480 Farmland 14,484 3,712 (2,001) — — 16,195 Total commercial real estate loans 20,502 9,199 (6,135) — — 23,566 Consumer: SFR 1-4 1st DT 2,811 4,060 (641) (26) (225) 5,979 SFR HELOCs and junior liens 3,571 2,138 (1,801) (40) — 3,868 Other 105 511 (43) (369) — 204 Total consumer loans 6,487 6,709 (2,485) (435) (225) 10,051 Commercial and industrial 2,513 11,017 (1,978) (1,787) — 9,765 Construction 67 9 (7) — (12) 57 Agriculture production 2,321 692 (906) (1,450) — 657 Leases — — — — — — Total nonperforming loans 31,890 27,626 (11,511) (3,672) (237) 44,096 Foreclosed assets 2,705 423 (395) (184) 237 2,786 Total nonperforming assets $ 34,595 $ 28,049 $ (11,906) $ (3,856) $ — $ 46,882 The table above does not include deposit overdraft charge-offs. Nonperforming assets increased by $12.3 million or 35.5% to $46.9 million at December 31, 2024 from $34.6 million at December 31, 2023. The increase in nonperforming assets during 2024 was primarily the result of additions of nonperforming loans totaling $27.6 million, partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $11.5 million, and net charge-offs of $3.7 million. 42 TriCo Bancshares 2024 10-K T a ble of Contents Changes in nonperforming assets during the year ended December 31, 2023 The following table shows the activity in the balance of nonperforming assets for the year ended December 31, 2023: (in thousands) Balance at December 31, 2022 Additions Advances/ Paydowns, net Charge-offs/ Write-downs Transfers to Foreclosed Assets Balance at December 31, 2023 Commercial real estate: CRE non-owner occupied $ 1,739 $ 1,268 $ (983) $ — $ — $ 2,024 CRE owner occupied 4,938 15,884 (13,142) (3,636) (50) 3,994 Multifamily 125 — (125) — — — Farmland 1,772 14,843 (2,131) — — 14,484 Total commercial real estate loans 8,574 31,995 (16,381) (3,636) (50) 20,502 Consumer: SFR 1-4 1st DT 4,220 943 (2,247) — (105) 2,811 SFR HELOCs and junior liens 3,155 1,979 (1,496) (67) — 3,571 Other 76 345 (134) (182) — 105 Total consumer loans 7,451 3,267 (3,877) (249) (105) 6,487 Commercial and industrial 3,526 9,014 (6,148) (3,879) — 2,513 Construction 491 — (424) — — 67 Agriculture production 1,279 4,341 (3,299) — — 2,321 Leases — — — — — — Total nonperforming loans 21,321 48,617 (30,129) (7,764) (155) 31,890 Foreclosed assets 3,439 64 (322) (631) 155 2,705 Total nonperforming assets $ 24,760 $ 48,681 $ (30,451) $ (8,395) $ — $ 34,595 The table above does not include deposit overdraft charge-offs. Nonperforming assets increased by $9.8 million or 39.7% to $34.6 million at December 31, 2023 from $24.8 million at December 31, 2022. The increase in nonperforming assets during 2023 was the result of $48.6 million of additions to non-performing loans, which was partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $30.1 million and net charge-offs of $7.8 million. 43 TriCo Bancshares 2024 10-K T a ble of Contents Changes in nonperforming assets during the three months ended December 31, 2024 The following table shows the activity in the balance of nonperforming assets for the quarter ended December 31, 2024: (in thousands) Balance at September 30, 2024 Additions Advances/ Paydowns, net Charge-offs/ Write-downs (1) Transfers to Foreclosed Assets Balance at December 31, 2024 Commercial real estate: CRE non-owner occupied $ 3,623 $ — $ (606) $ — $ — $ 3,017 CRE owner occupied 3,278 748 (152) — — 3,874 Multifamily 502 — (22) — — 480 Farmland 12,967 3,712 (484) — — 16,195 Total commercial real estate loans 20,370 4,460 (1,264) — — 23,566 Consumer: SFR 1-4 1st DT 5,997 413 (206) — (225) 5,979 SFR HELOCs and junior liens 4,238 336 (706) — — 3,868 Other 117 203 (8) (108) — 204 Total consumer loans 10,352 952 (920) (108) (225) 10,051 Commercial and industrial 10,642 410 (774) (513) — 9,765 Construction 59 — (2) — — 57 Agriculture production 213 475 (31) — — 657 Leases — — — — — — Total nonperforming loans 41,636 6,297 (2,991) (621) (225) 44,096 Foreclosed assets 2,764 (19) (184) 225 2,786 Total nonperforming assets $ 44,400 $ 6,278 $ (2,991) $ (805) $ — $ 46,882 (1) Charge-offs and write-downs exclude deposit overdraft charge-offs. Nonperforming assets increased during the fourth quarter by $2.5 million or 5.6% to $46.9 million at December 31, 2024 compared to $44.4 million at September 30, 2024. The increase in nonperforming assets during the fourth quarter of 2024 was the result of new nonperforming loans of $6.3 million, that were partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $3.0 million, and net charge-offs of $0.6 million in non-performing loans. 44 TriCo Bancshares 2024 10-K T a ble of Contents Changes in nonperforming assets during the three months ended December 31, 2023 The following table shows the activity in the balance of nonperforming assets for the quarter ended December 31, 2023: (in thousands) Balance at September 30, 2023 Additions Advances/ Paydowns, net Charge-offs/ Write-downs (1) Transfers to Foreclosed Assets Balance at December 31, 2023 Commercial real estate: CRE non-owner occupied $ 1,105 $ 921 $ (2) $ — $ — $ 2,024 CRE owner occupied 3,898 247 (73) (28) (50) 3,994 Multifamily — — — — — — Farmland 11,707 3,009 (232) — — 14,484 Total commercial real estate loans 16,710 4,177 (307) (28) (50) 20,502 Consumer: SFR 1-4 1st DT 2,884 53 (126) — — 2,811 SFR HELOCs and junior liens 3,158 602 (165) (24) — 3,571 Other 156 16 (51) (16) — 105 Total consumer loans 6,198 671 (342) (40) — 6,487 Commercial and industrial 2,950 685 (546) (576) — 2,513 Construction 71 — (4) — — 67 Agriculture production 3,870 1,000 (2,549) — — 2,321 Leases — — — — — — Total nonperforming loans 29,799 6,533 (3,748) (644) (50) 31,890 Foreclosed assets 2,852 — (197) — 50 2,705 Total nonperforming assets $ 32,651 $ 6,533 $ (3,945) $ (644) $ — $ 34,595 (1) Charge-offs and write-downs exclude deposit overdraft charge-offs. Nonperforming assets increased during the fourth quarter of 2023 by $1.9 million or 6.0% to $34.6 million at December 31, 2023 compared to $32.7 million at September 30, 2023. The increase in nonperforming assets during the fourth quarter of 2023 was the result of new nonperforming loans of $6.5 million, that were partially offset by net paydowns, sales or upgrades of nonperforming loans to performing status totaling $3.7 million, and net charge-offs of $0.6 million in non-performing loans. Allowance for Credit Losses - Investment Securities The Company evaluates available for sale debt securities in an unrealized loss position to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Both the allowance for credit losses and the adjustment to net income may be reversed if conditions change. However, if the Company intends to sell an impaired available for sale debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. During the years ended December 31, 2024 and 2023, no allowance for credit losses nor impairment recognized in earnings related to available for sale investment securities was recorded. Allowance for Credit Losses - Held to Maturity Investment Securities In addition to credit losses associated with the Company's loan portfolio, the CECL standard requires that loss estimates be developed for securities classified as held-to-maturity (HTM). As of December 31, 2024, the Company's HTM investment portfolio had a carrying value of approximately $111.9 million and was comprised of $109.2 million in obligations backed by U.S. government agencies and $2.7 million in obligations of states and political subdivisions. As the 97.6% of the HTM portfolio consisted of investment securities where payment performance has an implicit or explicit guarantee from the U.S. government and where no history of credit losses exist, management believes that indicators for zero loss are present and therefore, no loss reserves were recognized in conjunction with the adoption of the CECL standard. Further, management separately evaluated its HTM investment securities from obligations of state and political subdivisions utilizing the historical loss data represented by similar securities over a period of time spanning nearly 50 years. Based on this evaluation, management determined that the expected credit losses associated with these securities is less than significant for financial reporting purposes. Therefore, during the year ended December 31, 2024 as 2023, no allowance for credit losses related to HTM securities was recorded. 45 TriCo Bancshares 2024 10-K T a ble of Contents Allowance for Credit Losses - Unfunded Commitments The estimated credit losses associated with these unfunded lending commitments is calculated using the same models and methodologies noted above and incorporate utilization assumptions at the estimated time of default. While the provision for credit losses associated with unfunded commitments is included in "provision for (benefit from) credit losses" on the consolidated statement of income, the reserve for unfunded commitments is maintained on the consolidated balance sheet in other liabilities. The Components of the Allowance for Credit Losses The following table sets forth the Bank’s allowance for credit losses related to loans as of the dates indicated (dollars in thousands): December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Allowance for credit losses: Qualitative and forecast factor allowance $ 86,833 $ 84,291 $ 70,777 $ 59,855 $ 61,935 Quantitative (Cohort) model allowance reserves 33,908 34,139 32,489 24,539 28,462 Total allowance for credit losses 120,741 118,430 103,266 84,394 90,397 Allowance for individually evaluated loans 4,625 3,092 2,414 982 1,450 Total allowance for credit losses $ 125,366 $ 121,522 $ 105,680 $ 85,376 $ 91,847 Ratio of allowance for credit losses to gross loans 1.85 % 1.79 % 1.64 % 1.74 % 1.93 % Based on the current conditions of the loan portfolio, management believes that the $125.4 million allowance for credit losses at December 31, 2024 is adequate to absorb probable losses inherent in the Bank’s loan portfolio. No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio. The Company utilizes a forecast period of approximately eight quarters and obtains the forecast data from publicly available sources as of the balance sheet date. This forecast data continues to evolve and includes improving shifts in the magnitude of changes for both the unemployment and GDP factors leading up to the balance sheet date. Core inflation is slowing but prices remain elevated relative to wage increases, as reflected by higher living costs such as housing, energy and general services. Actions by the Federal Reserve to cut rates during 2024 and beyond may help improve this outlook overall, but the uncertainty associated with the extent and timing of these potential reductions has inhibited a material change to forecasted reserve levels. Furthermore, geopolitical risks remain elevated, which may lead to further negative effects on domestic economic outcomes. As a result, management continues to believe that certain credit weaknesses are present in the overall economy and that it is appropriate to maintain a reserve level that incorporates such risk factors. The following table summarizes the allocation of the allowance for credit losses between loan types: December 31, (in thousands) 2024 2023 2022 2021 2020 Commercial real estate $ 72,849 $ 68,864 $ 61,381 $ 51,140 $ 53,693 Consumer 27,463 27,453 24,639 23,474 25,148 Commercial and industrial 14,397 12,750 13,597 3,862 4,252 Construction 7,224 8,856 5,142 5,667 7,540 Agriculture production 3,403 3,589 906 1,215 1,209 Leases 30 10 15 18 5 Total allowance for credit losses $ 125,366 $ 121,522 $ 105,680 $ 85,376 $ 91,847 The following table summarizes the allocation of the allowance for credit losses between loan types as a percentage of the total allowance for credit losses: December 31, 2024 2023 2022 2021 2020 Commercial real estate 58.1 % 56.7 % 58.0 % 59.9 % 58.5 % Consumer 21.9 % 22.6 % 23.3 % 27.5 % 27.4 % Commercial and industrial 11.5 % 10.5 % 12.9 % 4.5 % 4.6 % Construction 5.8 % 7.3 % 4.9 % 6.6 % 8.2 % Agriculture production 2.7 % 2.9 % 0.9 % 1.4 % 1.3 % Leases — % — % — % 0.1 % — % Total allowance for credit losses 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 46 TriCo Bancshares 2024 10-K T a ble of Contents The following table summarizes the allocation of the allowance for credit losses between loan types as a percentage of total loans in each of the loan categories listed: December 31, 2024 2023 2022 2021 2020 Commercial real estate 1.59 % 1.57 % 1.41 % 1.55 % 1.82 % Consumer 2.14 % 2.09 % 1.99 % 2.19 % 2.62 % Commercial and industrial 3.05 % 2.17 % 2.39 % 1.49 % 0.81 % Construction 2.58 % 2.55 % 2.43 % 2.55 % 2.65 % Agriculture production 2.24 % 2.48 % 1.48 % 2.39 % 2.74 % Leases 0.44 % 0.12 % 0.19 % 0.27 % 0.13 % Total allowance for credit losses 1.85 % 1.79 % 1.64 % 1.74 % 1.93 % The following tables summarize the net charge-off (recovery) activity in the allowance for credit/loan losses as a percentage of loans for the years indicated (dollars in thousands): Year ended December 31, Ratios: 2024 2023 2022 2021 2020 Net charge-offs (recoveries) during period to average loans outstanding during period Commercial real estate: CRE non-owner occupied (0.01) % — % — % — % 0.01 % CRE owner occupied — % 0.38 % — % (0.11) % — % Multifamily — % — % — % — % — % Farmland — % — % 0.01 % 0.07 % 0.12 % Consumer: SFR 1-4 1st DT liens — % (0.02) % — % 0.02 % (0.08) % SFR HELOCs and junior liens 0.10 % (0.01) % — % 0.33 % (0.06) % Other 0.81 % 0.50 % 0.20 % 0.32 % 0.41 % Commercial and industrial 0.23 % 0.60 % 0.17 % 0.28 % 0.04 % Construction — % — % — % 0.01 % — % Agriculture production 0.93 % — % — % (0.05) % (0.05) % Leases — % — % — % — % — % Provision for (benefit from) credit losses to average loans outstanding during period 0.10 % 0.35 % 0.29 % (0.15) % 0.92 % Allowance for credit losses to loans at year-end 1.85 % 1.79 % 1.64 % 1.74 % 1.93 % Generally, losses are triggered by non-performance by the borrower and calculated based on any difference between the current loan amount and the current value of the underlying collateral less any estimated costs associated with the disposition of the collateral. Foreclosed Assets, Net of Allowance for Losses The following tables detail the components and summarize the activity in foreclosed assets, net of allowances for losses for the years indicated (dollars in thousands): Balance at December 31, 2023 Additions Advances/ Capitalized Costs/Other Sales Valuation Adjustments Balance at December 31, 2024 Land & Construction $ 154 $ 11 $ — $ — $ 39 $ 204 Residential real estate 1,673 650 — (359) (281) 1,683 Commercial real estate 878 21 — — — 899 Total foreclosed assets $ 2,705 $ 682 $ — $ (359) $ (242) $ 2,786 47 TriCo Bancshares 2024 10-K T a ble of Contents Balance at December 31, 2022 Additions Advances/ Capitalized Costs/Other Sales Valuation Adjustments Balance at December 31, 2023 Land & Construction $ 154 $ — $ — $ — $ — $ 154 Residential real estate 1,709 105 — (127) (14) 1,673 Commercial real estate 1,576 50 — (79) (669) 878 Total foreclosed assets $ 3,439 $ 155 $ — $ (206) $ (683) $ 2,705 Deposit Portfolio Composition The following table shows the Company’s deposit balances at the dates indicated: Year ended December 31, (dollars in thousands) 2024 2023 2022 Noninterest-bearing demand $ 2,548,613 $ 2,722,689 $ 3,502,095 Interest-bearing demand 1,758,629 1,731,814 1,718,541 Savings 2,657,849 2,682,068 2,884,378 Time certificates, over $250,000 485,180 250,180 46,350 Other time certificates 637,305 447,287 177,649 Total deposits $ 8,087,576 $ 7,834,038 $ 8,329,013 Total uninsured deposits were estimated to be approximately $2.6 billion and $2.4 billion at December 31, 2024 and 2023, respectively. Long-Term Debt See Note 13 to the consolidated financial statements at Part II, Item 8 of this report for information about the Company’s other borrowings and long-term debt. Junior Subordinated Debt See Note 14 to the consolidated financial statements at Part II, Item 8 of this report for information about the Company’s junior subordinated debt. Equity See Note 16 and Note 26 in the consolidated financial statements at Part II, Item 8 of this report for a discussion of shareholders’ equity and regulatory capital, respectively. Management believes that the Company’s capital is adequate to support anticipated growth, meet the cash dividend requirements of the Company and meet the future risk-based capital requirements of the Bank and the Company. On February 25, 2021 the Board of Directors approved the authorization to repurchase up to 2,000,000 shares of the Company's common stock (the 2021 Repurchase Plan), which approximated 6.7% of the shares outstanding as of the approval date. The following table shows the repurchases made by the Company during 2024 under the 2021 Plan: Period Total number of shares purchased Average price paid per share Maximum number of shares remaining that may yet be purchased under the 2021 Plan October 1-31, 2024 — — 865,478 November 1-30, 2024 — — 865,478 December 1-31, 2024 34,955 $48.56 830,523 January 1, 2024 - December 31, 2024 379,279 $37.39 830,523 Market Risk Management Overview. The goal for managing the assets and liabilities of the Bank is to maximize shareholder value and earnings while maintaining a high quality balance sheet without exposing the Bank to undue interest rate risk. The Board of Directors has overall responsibility for the Company’s interest rate risk management policies. The Bank has an Asset and Liability Management Committee which establishes and monitors guidelines to control the sensitivity of earnings and the fair value of certain assets and liabilities as may be caused by changes in interest rates. The Company does not hold any financial instruments that are not maintained in US dollars and is not party to any contracts that may be settled or repaid in a denomination other than US dollars. 48 TriCo Bancshares 2024 10-K T a ble of Contents Asset/Liability Management. Activities involved in asset/liability management include but are not limited to lending, accepting and placing deposits, investing in securities and issuing debt. Interest rate risk is the primary market risk associated with asset/liability management. Sensitivity of earnings to interest rate changes arises when yields on assets change in a different time period or in a different amount from that of interest costs on liabilities. To mitigate interest rate risk, the structure of the balance sheet is managed with the goal that movements of interest rates on assets and liabilities are correlated and contribute to earnings even in periods of volatile interest rates. The asset/liability management policy sets limits on the acceptable amount of variance in net interest margin and market value of equity under changing interest environments. Market value of equity is the net present value of estimated cash flows from the Bank’s assets, liabilities and off-balance sheet items. The Bank uses simulation models to forecast net interest margin and market value of equity. Simulation of net interest margin and market value of equity under various interest rate scenarios is the primary tool used to measure interest rate risk. The Bank estimated the potential impact of changing interest rates on net interest margin and market value of equity using computer-modeling techniques. A balance sheet forecast is prepared using inputs of actual loan, securities and interest-bearing liability (i.e. deposits/borrowings) positions as the beginning base. In the simulation of net interest income and market value of equity, the forecast balance sheet is processed against various interest rate scenarios. These various interest rate scenarios include a flat rate scenario, which assumes interest rates are unchanged in the future, and rate ramp and or shock scenarios including -300, -200, -100, +100, +200, and +300 basis points around the flat scenario. At December 31, 2024, the overnight Federal funds rate, the rate primarily used in these interest rate shock scenarios, was 4.5%. These scenarios assume that 1) interest rates increase or decrease evenly (in a “ramp” fashion) over a twelve-month period and remain at the new levels beyond twelve months or 2) that interest rates change instantaneously (“shock”). The simulation results shown below assume no changes in the structure of the Company’s balance sheet over the twelve months being measured. The following table summarizes the estimated effect on net interest income and market value of equity to changing interest rates as measured against a flat rate (no interest rate change) instantaneous shock scenario over a twelve month period utilizing the Company's specific mix of interest earning assets and interest bearing liabilities as of December 31, 2024. Interest Rate Risk Simulations: Change in Interest Rates (Basis Points) Estimated Change in Net Interest Income (NII) (as % of NII) Estimated Change in Market Value of Equity (MVE) (as % of MVE) +300 (shock) (7.4) % (6.0) % +200 (shock) (5.1) % (4.2) % +100 (shock) (2.4) % (1.2) % + 0 (flat) — — -100 (shock) 0.6 % (1.2) % -200 (shock) 0.9 % (5.9) % -300 (shock) 1.7 % (13.9) % These simulations indicate that given a “flat” balance sheet size scenario, and if interest-bearing checking, savings and money market interest rates track the general interest rate changes by the rate shock values listed above, the Company’s balance sheet is liability sensitive over a twelve month time horizon for both a rates up and rates down shock scenario, with greater sensitivity skewed toward rates up. “Asset sensitive” implies that net interest income increases when interest rates rise and decrease when interest rates decrease. “Liability sensitive” implies that net interest income decreases when interest rates rise and increase when interest rates decrease. “Neutral sensitivity” implies that net interest income does not change when interest rates change. The asset liability management policy limits aggregate market risk, as measured in this fashion, to an acceptable level within the context of risk-return trade-offs. The simulation results noted above do not incorporate any management actions that might moderate the negative consequences of interest rate deviations. In addition, the simulation results noted above contain various assumptions such as a flat balance sheet, and the rate that deposit interest rates change instantaneously as general interest rates change. Therefore, they do not reflect likely actual results, but serve as estimates of interest rate risk. More specifically, the Company's pre-existing low cost of funds, and the presumption that depositors will not accept a negative rate environment, does not allow management the ability to meaningfully adjust the cost of deposits below zero. In addition, many of the Company's loans and investment securities are considered fixed rate interest earning assets. Therefore, in an instantaneous upward rate shock scenario, management would expect the cost of interest bearing liabilities to reprice faster than interest earning assets. As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the preceding tables. For example, although certain of the Company’s assets and liabilities may have similar maturities or repricing time frames, they may react in different degrees to changes in market interest rates. In addition, the interest rates on certain of the Company’s asset and liability categories may precede, or lag behind, changes in market interest rates. Also, the actual rates of prepayments on loans and investments could vary significantly from the assumptions utilized in deriving the results as presented in the preceding tables. Further, a change in U.S. Treasury rates accompanied by a change in the shape of the treasury yield curve could result in different estimations from those presented 49 TriCo Bancshares 2024 10-K T a ble of Contents herein. Accordingly, the results in the preceding tables should not be relied upon as indicative of actual results in the event of changing market interest rates. Additionally, the resulting estimates of changes in market value of equity are not intended to represent, and should not be construed to represent, estimates of changes in the underlying value of the Company. Interest rate sensitivity is a function of the repricing characteristics of the Company’s portfolio of assets and liabilities. One aspect of these repricing characteristics is the time frame within which the interest-bearing assets and liabilities are subject to change in interest rates either at replacement, repricing or maturity. An analysis of the repricing time frames of interest-bearing assets and liabilities is sometimes called a “gap” analysis because it shows the gap between assets and liabilities repricing or maturing in each of a number of periods. Another aspect of these repricing characteristics is the relative magnitude of the repricing for each category of interest earning asset and interest-bearing liability given various changes in market interest rates. Gap analysis gives no indication of the relative magnitude of repricing given various changes in interest rates. Interest rate sensitivity management focuses on the maturity of assets and liabilities and their repricing during periods of changes in market interest rates. Interest rate sensitivity gaps are measured as the difference between the volumes of assets and liabilities in the Company’s current portfolio that are subject to repricing at various time horizons. The following interest rate sensitivity table shows the Company’s repricing gaps as of December 31, 2024. In this table transaction deposits, which may be repriced at will by the Company, have been included in the less than 3-month category. The inclusion of all of the transaction deposits in the less than 3-month repricing category causes the Company to appear liability sensitive. Because the Company may reprice its transaction deposits at will, transaction deposits may or may not reprice immediately with changes in interest rates. Due to the limitations of gap analysis, as described above, the Company does not actively use gap analysis in managing interest rate risk. Instead, the Company relies on the more sophisticated interest rate risk simulation model described above as its primary tool in measuring and managing interest rate risk. As of December 31, 2024 Repricing within: (dollars in thousands) Less than 3 months 3 - 6 months 6 - 12 months 1 - 5 years Over 5 years Interest-earning assets: Cash at Federal Reserve and other banks $ 17,075 $ — $ — $ — $ — Securities 464,738 100,408 110,049 685,277 925,526 Loans 1,405,589 326,268 614,799 2,446,744 756,731 Total interest-earning assets 1,887,402 426,676 724,848 3,132,021 1,682,257 Interest-bearing liabilities Transaction deposits 4,454,314 — — — — Time 260,580 218,181 148,218 70,488 Other borrowings 632,582 — — — — Junior subordinated debt 101,099 — — — — Total interest-bearing liabilities $ 5,448,575 $ 218,181 $ 148,218 $ 70,488 $ — Interest sensitivity gap $ (3,561,173) $ 208,495 $ 576,630 $ 3,061,533 $ 1,682,257 Cumulative sensitivity gap $ (3,561,173) $ (3,352,678) $ (2,776,048) $ 285,485 $ 1,967,742 As a percentage of earning assets: Interest sensitivity gap (39.4) % 2.3 % 6.4 % 33.9 % 18.6 % Cumulative sensitivity gap (39.4) % (37.1) % (30.7) % 3.2 % 21.8 % Liquidity Liquidity refers to the Company’s ability to provide funds at an acceptable cost to meet loan demand and deposit withdrawals, as well as contingency plans to meet unanticipated funding needs or loss of funding sources. These objectives can be met from either the asset or liability side of the balance sheet. Asset liquidity sources consist of the repayments and maturities of loans, selling of loans, short-term money market investments, maturities of securities and sales of securities from the available-for-sale portfolio. These activities are generally summarized as investing activities in the Consolidated Statement of Cash Flows. Net cash from investing activities totaled $285.0 million in 2024. Proceeds from the maturity and sales of investment securities, net of purchases, provided the bulk of the cash flows totaling approximately $266.5 million, in addition to $22.6 million from the net origination and collection of loans outstanding. Liquidity may also be impacted from liabilities through changes in deposits and borrowings outstanding. These activities are included under financing activities in the Consolidated Statement of Cash Flows. In 2024, financing activities used funds totaling $348.5 million, resulting from a reduction in short term borrowings of $543.0 million, $43.6 million in dividend payment outflows, and an additional $15.5 million 50 TriCo Bancshares 2024 10-K T a ble of Contents allocated toward the repurchase of common stock, partially offset by an increase in deposits totaling $253.5 million. The Company's primary sources of remaining available liquidity from available borrowings and in transit items include the following for the periods indicated: (dollars in thousands) December 31, 2024 December 31, 2023 Borrowing capacity at correspondent banks and FRB $ 2,821,678 $ 2,921,525 Less: borrowings outstanding (75,000) (600,000) Unpledged available-for-sale (AFS) investment securities 1,279,422 1,558,506 Cash held or in transit with FRB 96,395 51,253 Total primary liquidity $ 4,122,495 $ 3,931,284 Estimated uninsured deposit balances $ 2,584,265 $ 2,371,000 At December 31, 2024, the Company's primary sources of liquidity represented 51% of total deposits and 160% of estimated total uninsured (excluding collateralized municipal deposits and intercompany balances) deposits, respectively. As secondary sources of liquidity, the Company's held-to-maturity investment securities had a fair value of $104.3 million, including approximately $7.5 million in net unrealized losses. The Company did not utilize any brokered deposits during 2024 or 2023. While these sources are expected to continue to provide significant amounts of funds in the future, their mix, as well as the possible use of other sources, will depend on future economic and market conditions. Liquidity is also provided or used through the results of operating activities. In 2024, operating activities provided cash of $109.7 million, primarily from net income of $114.9 million. In 2023, operating activities provided cash of $138.9 million, primarily from net income of $117.4 million. Loan demand during 2025 will depend in part on economic and competitive conditions. The Company emphasizes the solicitation of non-interest bearing demand deposits and money market checking deposits, which are the least sensitive to interest rates. The outlook for deposit balances during 2025 is also subject to actions from the Federal Reserve, heightened competition, the success of the Company’s sales efforts, as well as the delivery of superior customer service and market conditions. The Federal Reserve's recent decrease in Fed Funds rates provided a modest level of relief on deposit margin expense, however, the competitive landscape for attracting and retaining deposit balances will continue to remain challenging during 2025. Therefore, due to concerns such as uncertainty in the general economic environment, political uncertainty, and loan demand, levels of customer deposits are not certain and forecasted changes in those balances are subject to significant volatility and uncertainty. Depending on economic conditions, interest rate levels, and a variety of other conditions, proceeds from the sale or maturity of investment securities may be used to fund loans, or reduce short-term borrowings. At December 31, 2024, we believe the Company has sufficient liquidity and capital resources to meet its cash flow obligations over the foreseeable future. The principal cash requirements of the Company are dividends on common stock when declared. The Company is dependent upon the payment of cash dividends by the Bank to service its commitments. Shareholder dividends are expected to continue subject to the Board’s discretion and continuing evaluation of capital levels, earnings, asset quality and other factors. The Company expects that the cash dividends paid by the Bank to the Company will be sufficient to meet this payment schedule. Dividends from the Bank are subject to certain regulatory restrictions. The maturity distribution of certificates of deposit in denominations of $250,000 or more is set forth in the following table. These deposits are generally more rate sensitive than other deposits and, therefore, are more likely to be withdrawn to obtain higher yields elsewhere if available. Portion of certificates of deposit in excess of $250,000 (dollars in thousands) At December 31, 2024 Time remaining until maturity: Less than 3 months $ 207,870 3 months to 6 months 58,918 6 months to 12 months 13,332 More than 12 months 3,560 Total $ 283,680 51 TriCo Bancshares 2024 10-K T a ble of Contents Loan maturities Loan demand also affects the Company’s liquidity position. The following table presents the maturities of loans, net of deferred loan fees, at December 31, 2024: Within One Year After One But Within Five Years After Five But Within 15 Years After 15 Years Total (dollars in thousands) Loans with predetermined interest rates: Commercial Real Estate $ 106,780 $ 607,737 $ 887,300 $ 20,669 $ 1,622,486 Consumer 9,101 36,136 110,519 392,001 547,757 Commercial & Industrial 7,807 136,070 67,625 12,785 224,287 Construction 21,666 7,409 24,044 42,792 95,911 Agricultural Production 357 12,489 1,152 — 13,998 Leases — 6,806 — — 6,806 Total loans with predetermined interest rates 145,711 806,647 1,090,640 468,247 2,511,245 Loans with floating interest rates: Commercial Real Estate 93,128 459,409 2,341,412 61,197 2,955,146 Consumer 5,270 44,162 132,126 551,744 733,302 Commercial & Industrial 152,788 44,824 32,294 17,078 246,984 Construction 54,553 30,587 82,228 16,654 184,022 Agricultural Production 115,713 21,675 436 — 137,824 Leases — — — — — Total loans with floating interest rates 421,452 600,657 2,588,496 646,673 4,257,278 Total loans $ 567,163 $ 1,407,304 $ 3,679,136 $ 1,114,920 $ 6,768,523 Investment maturities The maturity distribution and yields of the investment portfolio at December 31, 2024 is presented in the following tables. The timing of the maturities indicated in the tables below is based on final contractual maturities. Most mortgage-backed securities return principal throughout their contractual lives. As such, the weighted average life of mortgage-backed securities based on outstanding principal balance is usually significantly shorter than the final contractual maturity indicated below. Yields on tax exempt securities are shown on a tax equivalent basis. Within One Year After One Year but Through Five Years After Five Years but Through Ten Years After Ten Years Total Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield (dollars in thousands) Debt Securities Available for Sale Obligations of US government agencies $ 6,469 0.63 % $ 37,744 3.36 % $ 29,845 1.83 % $ 1,020,127 2.35 % $ 1,094,185 2.36 % Obligations of states and political subdivisions — — % 24,034 3.17 % 63,488 3.17 % 133,222 3.28 % 220,744 3.24 % Corporate bonds — — % — — % 5,837 4.95 % — — % 5,837 4.95 % Asset backed securities 221 5.35 % 3,162 5.30 % 82,621 6.02 % 228,259 5.91 % 314,263 5.93 % Non-agency collateralized mortgage obligations — — % — — % — — % 269,856 2.91 % 269,856 2.91 % Total debt securities available for sale $ 6,690 0.78 % $ 64,940 3.38 % $ 181,791 4.21 % $ 1,651,464 2.95 % $ 1,904,885 3.07 % Debt Securities Held to Maturity Obligations of US government agencies $ — — % $ 3,054 2.22 % $ 87,690 2.80 % $ 18,411 2.46 % 109,155 2.72 % Obligations of states and political subdivisions 1,147 4.55 % — — % 1,564 3.63 % — — % 2,711 4.02 % Total debt securities held to maturity $ 1,147 4.55 % $ 3,054 2.22 % $ 89,254 2.79 % $ 18,411 2.59 % $ 111,866 2.75 % 52 TriCo Bancshares 2024 10-K T a ble of Contents Off-Balance Sheet Items The Bank has certain ongoing commitments under leases. See Note 11 of the financial statements at Part II, Item 8 of this report for the terms. These commitments do not significantly impact operating results. As of December 31, 2024, commitments to extend credit and commitments related to the Bank’s deposit overdraft privilege product were the Bank’s only financial instruments with off-balance sheet risk. The Bank has not entered into any material contracts for financial derivative instruments such as futures, swaps, options, etc. Commitments to extend credit were $2.1 billion and $2.2 billion at December 31, 2024 and 2023, respectively, and represent 32.0% of the total loans outstanding at year-end 2024 versus 32.3% at December 31, 2023. Commitments related to the Bank’s deposit overdraft privilege product totaled $121.0 million and $121.5 million at December 31, 2024 and 2023, respectively. Certain Contractual Obligations The following chart summarizes certain contractual obligations of the Company as of December 31, 2024: (dollars in thousands) Total Less than one year 1-3 years 4-5 years More than 5 years Time deposits $ 1,122,485 $ 1,081,409 $ 40,209 $ 867 $ — Term borrowing at FHLB, fixed rate of 5.23%, payable on April 8, 2025 75,000 75,000 — — — Junior subordinated debt: TriCo Trust I(1) 20,619 — — — 20,619 TriCo Trust II(2) 20,619 — — — 20,619 North Valley Trust II(3) 5,713 — — — 5,713 North Valley Trust III(4) 4,571 — — — 4,571 North Valley Trust IV(5) 7,863 — — — 7,863 VRB Subordinated - 6%(6) 16,799 — — — 16,799 VRB Subordinated - 5%(7) 25,007 — — — 25,007 Operating lease obligations 29,128 5,512 12,510 4,300 6,806 Deferred compensation(8) 368 184 184 — — Supplemental retirement plans(8) 18,018 1,768 3,110 3,106 10,034 Total contractual obligations $ 1,346,190 $ 1,163,873 $ 56,013 $ 8,273 $ 118,031 (1) Junior subordinated debt, adjustable rate of three-month SOFR plus 3.05%, callable in whole or in part by the Company on a quarterly basis beginning October 7, 2008, matures October 7, 2033. (2) Junior subordinated debt, adjustable rate of three-month SOFR plus 2.55%, callable in whole or in part by the Company on a quarterly basis beginning July 23, 2009, matures July 23, 2034. (3) Junior subordinated debt, adjustable rate of three-month SOFR plus 3.25%, callable in whole or in part by the Company on a quarterly basis beginning April 24, 2008, matures April 24, 2033. (4) Junior subordinated debt, adjustable rate of three-month SOFR plus 2.80%, callable in whole or in part by the Company on a quarterly basis beginning July 23, 2009, matures July 23, 2034. (5) Junior subordinated debt, adjustable rate of three-month SOFR plus 1.33%, callable in whole or in part by the Company on a quarterly basis beginning March 15, 2011, matures March 15, 2036. (6) Junior subordinated debt, floating rate of three-month SOFR plus 3.52% until maturity in 2029. Redeemable in whole or in part by the Company beginning March 29, 2024. (7) Junior subordinated debt, fixed rate of 5% until August 27, 2025, then floating rate of 90-day average SOFR plus 4.90% until maturity in 2035. Redeemable in whole or in part by the Company beginning August 27, 2025. (8) These amounts represent known certain payments to participants under the Company’s deferred compensation and supplemental retirement plans. See Note 22 in the financial statements at Part II, Item 8 of this report for additional information related to the Company’s deferred compensation and supplemental retirement plan liabilitie s. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See “Market Risk Management” under Item 7 of this report which is incorporated herein. 53 TriCo Bancshares 2024 10-K T a ble of Contents